MBA 700 Questions With Step-by-Step Solution
Strategic management process (analysis, formulation, implementation)
Correct Answer - - Companies without coherent strategy fail
- Firms need strategies to deal with changes/uncertainty in the external
environment
- Strategy is the set of actions that a firm takes to outperform competitors and
achieve superior profitability
- The greater difference between value creation and cost, the greater the
likelihood for competitive advantage
- Strategic positioning requires trade-offs:
- Ex: Walmart = everyday low prices, Nordstrom = luxury sales
Elements of a good strategy Correct Answer - - Analysis: diagnosis of the
competitive challenge
- Formulation: guiding policy to address the competitive challenge
- Implementation: a set of actions to implement the policy
Strategy is NOT Correct Answer - - Statements of desire- "we will be #1"
- Failure to face a competitive challenge
- Operational effectiveness, competitive benchmarking, etc.
General environment Correct Answer - - Deals with the broader society
and the ways that influences firms
- You have to understand the environment to understand the present and
predict the future
- Demographic, socio-cultural, economic, political/legal, technological, global
- A good way to analyze is using a SWOT analysis
Unattractive vs. Attractive Industry Correct Answer - - U: low entry
barriers, suppliers/buyers have strong positions, strong threats from
substitutes, intense rivalry among competitors **low profit potential**
, - A: high entry barriers, suppliers/buyers have weak positions, few threats
from substitutes, moderate rivalry among competitors **high profit
potential**
Porter's 5 Forces Correct Answer - - Threat of new entrants: new
competitors can change the industry and reduce a firm's profitability
- Threat of substitutes: puts a ceiling on prices because there are other options
- Industry rivals: price competition, advertising battles, etc.
- Buyer power: buyers can force down prices by playing competitors against
each other
- Supplier power: suppliers can raise prices or reduce the quality of purchased
goods
Value chain analysis Correct Answer - - A strategic analysis of an
organization that uses value creating activities
- Finding a different way to perform activities will give a longer-lasting
advantage
Resource-based view Correct Answer - - Two perspectives: the internal
analysis of phenomena within a company, an external analysis of the industry
and its competitive environment
- Resources can be tangible (financial, physical, technological) or intangible
(human, innovation, reputational)
Competitive advantage Correct Answer - - For a resources or capability
to be a competitive advantage, it must be valuable, rare, costly to imitate and
nonsubstitutable
Types of competitive advantage Correct Answer - - Cost leadership:
lowest prices for customers
Strategic management process (analysis, formulation, implementation)
Correct Answer - - Companies without coherent strategy fail
- Firms need strategies to deal with changes/uncertainty in the external
environment
- Strategy is the set of actions that a firm takes to outperform competitors and
achieve superior profitability
- The greater difference between value creation and cost, the greater the
likelihood for competitive advantage
- Strategic positioning requires trade-offs:
- Ex: Walmart = everyday low prices, Nordstrom = luxury sales
Elements of a good strategy Correct Answer - - Analysis: diagnosis of the
competitive challenge
- Formulation: guiding policy to address the competitive challenge
- Implementation: a set of actions to implement the policy
Strategy is NOT Correct Answer - - Statements of desire- "we will be #1"
- Failure to face a competitive challenge
- Operational effectiveness, competitive benchmarking, etc.
General environment Correct Answer - - Deals with the broader society
and the ways that influences firms
- You have to understand the environment to understand the present and
predict the future
- Demographic, socio-cultural, economic, political/legal, technological, global
- A good way to analyze is using a SWOT analysis
Unattractive vs. Attractive Industry Correct Answer - - U: low entry
barriers, suppliers/buyers have strong positions, strong threats from
substitutes, intense rivalry among competitors **low profit potential**
, - A: high entry barriers, suppliers/buyers have weak positions, few threats
from substitutes, moderate rivalry among competitors **high profit
potential**
Porter's 5 Forces Correct Answer - - Threat of new entrants: new
competitors can change the industry and reduce a firm's profitability
- Threat of substitutes: puts a ceiling on prices because there are other options
- Industry rivals: price competition, advertising battles, etc.
- Buyer power: buyers can force down prices by playing competitors against
each other
- Supplier power: suppliers can raise prices or reduce the quality of purchased
goods
Value chain analysis Correct Answer - - A strategic analysis of an
organization that uses value creating activities
- Finding a different way to perform activities will give a longer-lasting
advantage
Resource-based view Correct Answer - - Two perspectives: the internal
analysis of phenomena within a company, an external analysis of the industry
and its competitive environment
- Resources can be tangible (financial, physical, technological) or intangible
(human, innovation, reputational)
Competitive advantage Correct Answer - - For a resources or capability
to be a competitive advantage, it must be valuable, rare, costly to imitate and
nonsubstitutable
Types of competitive advantage Correct Answer - - Cost leadership:
lowest prices for customers
